AEA Papers and Proceedings
ISSN 2574-0768 (Print) | ISSN 2574-0776 (Online)
Export-Platform FDI: Cannibalization or Complementarity?
AEA Papers and Proceedings
(pp. 130–35)
Abstract
We develop a model of export-platform foreign direct investment in which final goods are produced only with labor and there are no fixed costs of exporting. We derive a simple condition that determines whether an MNE's plants are substitutes or complements. This condition is shaped by the relative size of (i) the cross-firm elasticity of demand the MNE faces for its goods and (ii) the within-firm elasticity of labor substitution across the MNE's plants. In two extensions of the model, we show that this complementarity is enhanced by firm-level (rather than plant-level) fixed costs of exporting and of sourcing inputs.Citation
Antràs, Pol, Evgenii Fadeev, Teresa C. Fort, and Felix Tintelnot. 2024. "Export-Platform FDI: Cannibalization or Complementarity?" AEA Papers and Proceedings 114: 130–35. DOI: 10.1257/pandp.20241021Additional Materials
JEL Classification
- D24 Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
- F14 Empirical Studies of Trade
- F23 Multinational Firms; International Business